Shanghainese continue to park money in banks

By Zhang Fengming  |   2008-12-9  |     ONLINE EDITION

BANK savings in Shanghai rose robustly last month as household dashed to put money at bank accounts in fear of further interest rate cut to trim their returns, China's central bank said today.

New household saving added 28.03 billion yuan (US$4.1 billion) in November, up 5.15 billion yuan than a month ago, said the Shanghai headquarters of the People's Bank of China.

It also marked a year-on-year growth of 15.35 billion yuan. Chinese mainland stock market soared to its peak on late October, 2007. Savings drained to stock market last year.

Households are opting for term deposits to lock safer and more stable returns with limited investment options amid the sluggish stock and property markets. The expectation for more interest rates cut has pushed them to put more money at banks as early as possible.

The central bank has cut its interest rates four times since September to bolster economy growth and stimulate lending. The one-year benchmark deposits rate scaled back from 4.14 percent to 2.52 percent.

The central government announced a positive fiscal policy and moderately easing monetary policy. Economists have expected more rate cuts under pipeline amid the policies.

New yuan lending added 24.04 billion yuan last month, up 16.96 billion yuan than a month ago, or a year-on-year drop of 4.17 billion yuan.

The main new lending is offered by domestic joint stock banks.

Bank notes financing is the main driver for the month-by-month lending growth as lenders prefer the vehicle which is safer with the back of underlying notes or bills.

Individual mortgage loan at domestic banks eased its decline in November. However, the impact of the central government's policy to stimulate first-hand property buying is still under testing, the central bank said.

Individual mortgage decreased 1.44 billion yuan in November while the loan dropped 2.11 billion yuan in October.